6th Aug 2008 16:36
Third Quarter Production Report and Interim Management Statement
Lonmin today announces its production report and interim management statement for the three months and nine months to 30 June 2008 (unaudited).
Chief Executive, Brad Mills said "The effectiveness of our new Mining team is already being demonstrated and the detailed plans now in place will continue to improve performance. I am confident that we are now substantially better equipped to exploit Lonmin's unique and high quality PGM deposits."
Q3 Production
Metallurgical production for the third quarter was 188,350 ounces of Platinum and 369,674 ounces of total PGMs, an increase of 8.2% and 13.1% respectively on production through our Process Division for the third quarter of 2007. Sales for the period were 180,270 ounces of Platinum and 345,887 ounces of PGMs.
At our interim results on 8 May 2008, we announced that we had hired a new senior Mining management team led by Chris Sheppard. We also announced that this team was implementing a number of initiatives to optimise our Mining operations and increase efficiency, reliability and productivity. We are starting to see the benefits of these initiatives with our mining operations showing positive momentum in the third quarter delivering total tonnes mined of 3.2 million, an increase of 11.0% on the second quarter of the 2008 financial year. Tonnages declined by 12.0% on the same period in the prior year as a result of the continued impact of a number of safety related shutdowns (including section 54 shutdowns following two fatal accidents), the slower than anticipated ramp up of our mechanised shafts and our increased emphasis on accelerating ore reserve development across the operations, with development rates rising quarter on quarter.
The Marikana mining operations mined a total of 2.6 million tonnes from underground up 7.0% on the second quarter of 2008. Tonnages declined by 10.0% on the 2.9 million tonnes mined in the prior year period. Conventional underground operations contributed 2.3 million tonnes of ore in the quarter an increase of 5.3% on the second quarter of the financial year and a decrease of 15.0% on the 2.7 million tonnes mined for the same period in 2007.
Production from our mechanised shafts continued to increase with 0.3 million tonnes mined, an increase of 64.0% on the same period last year, contributing around 12% of our underground production from Marikana.
The concentrators produced a total of 184,919 saleable ounces of Platinum in concentrate for the quarter, an increase of 18.0% on the second quarter on 2008. Output was down 15.2% on the third quarter of the 2007 financial year primarily as a result of the lower throughput from the mines. Our improvement programmes in the concentrators showed encouraging results with overall recoveries up to 79.9% from 75.6% and underground recoveries at 82.4% up from 79.3% for the prior year period.
Nine Month Production
Total refined production for the nine months was 470,999 ounces of Platinum, a decrease of 9.1% on the prior year period. This reflects the lower level of throughput from the mines as well as the slower than anticipated release of metal in process across the Process Division. With no toll smelting in the period, production through our own processing facilities increased by 9.0% versus the 433,561 Platinum ounces processed in the first nine months of 2007.
Final metal sales for the nine months were 469,233 ounces of Platinum and 903,163 ounces of total PGMs, broadly flat on the prior year.
We mined a total of 9.2 million tonnes of ore in the first nine months of the year, a decline of 13% on the prior year period. Our Marikana operations contributed 8.5 million tonnes, a 12% decrease on the same period in 2007 with underground operations contributing 7.5 million tonnes. As previously reported underground production was principally impacted by safety related stoppages, the Eskom four day power outage in January, high levels of absenteeism particularly in the first half of the financial year and the slower than anticipated ramp up of our mechanised shafts.
Underground milled head grade was 4.65 grammes per tonne (5PGE+Au), 6.0% lower than the prior year partly as a result of ore mix issues including the increased percentage of lower grade development ore from the Marikana mechanised shafts. Opencast milled head grade was 3.51 grammes per tonne (5PGE+Au), a decline of 22.0% on the prior year as we milled more oxidised shallow material due to the short term reduced percentage of UG2 ore in the mix.
The concentrators produced a total of 531,812 saleable ounces of Platinum in concentrate for the nine months down 20.0% on the first nine months of the 2007 financial year reflecting the lower levels of throughput from the mines and lower opencast pit grades. Overall recoveries improved to 79.2% from 77.3% on the same period in 2007 and underground recoveries were up at 81.8% versus 80.7% last year.
2008 Sales Guidance
Since the half year, the Mining Division's forecast for metals in concentrate for the 2008 financial year has reduced by around 10,000 saleable ounces of Platinum principally as a result of safety related shutdowns including section 54 shutdowns experienced in the third quarter.
On 17 July 2008, we shut down our Merensky furnace following a matte run out through one of the tap holes. Investigations into the incident indicated that a matte build up had caused some damage to the inside of the furnace walls and, to ensure the safety of the vessel, we have elected to rebuild the furnace box. We currently expect to tap matte again from this furnace on 15 September 2008. In order to mitigate the impact of the shutdown and repairs on production, we have increased the power levels and throughput in the Number One furnace and are utilising two of our Pyromet furnaces.
This incident coupled with the seven day power down of the Number One furnace, which we announced on 30 June 2008, will result in the deferral of around 10,000 to 15,000 ounces of Platinum sales from the 2008 financial year to the 2009 financial year. These incidents have also impacted our ability to release all of the metal in process (both from closing stock at the end of the 2007 financial year and the build-up of additional stocks during the year) that we anticipated would flow through our system before the end of the financial year.
As a result of the timing issues around the release of metal in process, we now estimate that Platinum sales for the 2008 financial year will be around the current market consensus of circa 725,000 ounces of Platinum.
Other than as described above, and as noted in the press release this morning in respect of the pre-conditional offer by Xstrata, there have been no material events or transactions affecting Lonmin, and there has been no significant change in the financial position or performance of the Group since 31 March 2008 to the date of this report.
|
Enquiries: Alex Shorland-Ball +44 (0) 20 7201 6060 Vice President, Investor Relations & Communications |
Disclaimer on Forward Looking Statements
This release contains statements that are forward looking, including statements relating to metallurgical production, mining operations, efficiency initiatives and our expectations regarding 2008 sales. Forward-looking statements are not based on historical facts, but rather on current expectations and projections about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. Often, but not always, forward-looking statements may be identified by the use of forward-looking words such as "plans", "expects" or "does not expect", "is expected", "is subject to", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "should", "would", "might" or "will" be taken, occur or be achieved. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Lonmin, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding Lonmin's present and future business strategies and the environment in which Lonmin will operate in the future. Among the important factors that could cause Lonmin's actual results, performance or achievements to differ materially from those in the forward-looking statements include, among others, levels of actual production during any period, levels of demand and market prices, the ability to produce and transport products profitably, the impact of foreign currency exchange rates on market prices and operating costs, interest rates, operational problems, industry trends, labour relations, political uncertainty and economic conditions in relevant areas of the world, the actions of competitors and activities by governmental authorities such as changes in taxation or regulation. Other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules and the Disclosure and Transparency Rules of the Financial Services Authority), Lonmin is not under any obligation and Lonmin expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
|
|
|
|
|
3 months to 30 June |
3 months to 30 June |
9 months to 30 June |
9 months to 30 June |
|
|
|
|
|
|
|
2008 |
2007 |
2008 |
2007 |
|
Tonnes mined |
Marikana |
Underground - conventional |
000 |
2,291 |
2,694 |
6,640 |
8,038 |
|
|
Underground - M&A1 |
000 |
305 |
186 |
857 |
422 |
|||
|
|
Underground - total |
000 |
2,596 |
2,880 |
7,497 |
8,460 |
||
|
Opencast |
000 |
370 |
472 |
994 |
1,176 |
|||
|
Total |
000 |
2,966 |
3,352 |
8,491 |
9,636 |
|||
|
Limpopo |
Underground |
000 |
138 |
174 |
402 |
564 |
||
|
Opencast |
000 |
0 |
0 |
0 |
0 |
|||
|
Total |
000 |
138 |
174 |
402 |
564 |
|||
|
Pandora attributable2 |
Underground |
000 |
28 |
32 |
96 |
92 |
||
|
Opencast |
000 |
77 |
82 |
178 |
232 |
|||
|
Total |
000 |
105 |
114 |
273 |
324 |
|||
|
Lonmin Platinum |
Underground |
000 |
2,762 |
3,086 |
7,995 |
9,115 |
||
|
Opencast |
000 |
447 |
554 |
1,172 |
1,408 |
|||
|
Total |
000 |
3,208 |
3,640 |
9,166 |
10,524 |
|||
|
Tonnes milled3 |
Marikana |
Underground |
000 |
2,622 |
2,834 |
7,466 |
8,415 |
|
|
|
Opencast |
000 |
198 |
340 |
917 |
1,078 |
||
|
|
Total |
000 |
2,820 |
3,173 |
8,383 |
9,493 |
||
|
Limpopo |
Underground |
000 |
199 |
198 |
405 |
595 |
||
|
|
Opencast |
000 |
0 |
0 |
0 |
0 |
||
|
|
Total |
000 |
199 |
198 |
405 |
595 |
||
|
Pandora4 |
Underground |
000 |
66 |
75 |
225 |
217 |
||
|
|
Opencast |
000 |
147 |
194 |
338 |
530 |
||
|
|
Total |
000 |
212 |
270 |
563 |
747 |
||
|
Ore purchases5 |
Underground |
000 |
0 |
3 |
0 |
75 |
||
|
|
Opencast |
000 |
0 |
20 |
30 |
20 |
||
|
|
Total |
000 |
0 |
23 |
30 |
95 |
||
|
Lonmin Platinum |
Underground |
000 |
2,887 |
3,110 |
8,097 |
9,300 |
||
|
Head grade6 |
g/t |
4.54 |
4.94 |
4.65 |
4.96 |
|||
|
Recovery rate7 |
% |
82.4% |
79.3% |
81.8% |
80.7% |
|||
|
Opencast |
000 |
344 |
554 |
1,286 |
1,629 |
|||
|
Head grade6 |
g/t |
4.41 |
4.77 |
3.51 |
4.49 |
|||
|
Recovery rate7 |
% |
58.5% |
54.0% |
57.4% |
55.3% |
|||
|
Total |
000 |
3,231 |
3,665 |
9,382 |
10,929 |
|||
|
|
|
Head grade6 |
g/t |
4.52 |
4.92 |
4.50 |
4.89 |
|
|
|
|
|
Recovery rate7 |
% |
79.9% |
75.6% |
79.2% |
77.3% |
|
|
|
|
|
|
3 months to 30 June |
3 months to 30 June |
9 months to 30 June |
9 months to 30 June |
|
|
|
|
|
|
2008 |
Restated8 |
2008 |
Restated8 |
|
|
|
|
|
|
2007 |
2007 |
||
|
Metals in concentrate9 |
Marikana |
Platinum |
oz |
165,757 |
192,751 |
485,300 |
589,855 |
|
|
Palladium |
oz |
76,299 |
87,986 |
222,773 |
269,178 |
|||
|
Gold |
oz |
4,231 |
5,367 |
12,753 |
16,397 |
|||
|
Rhodium |
oz |
22,686 |
25,510 |
66,014 |
77,656 |
|||
|
Ruthenium |
oz |
35,236 |
40,237 |
101,915 |
124,191 |
|||
|
Iridium |
oz |
7,704 |
8,346 |
21,649 |
25,629 |
|||
|
Total PGMs |
oz |
311,913 |
360,196 |
910,404 |
1,102,906 |
|||
|
|
Nickel10 |
MT |
772 |
959 |
2,265 |
2,875 |
||
|
Copper10 |
MT |
474 |
557 |
1,381 |
1,711 |
|||
|
Limpopo |
Platinum |
oz |
7,594 |
8,613 |
16,183 |
27,372 |
||
|
Palladium |
oz |
6,357 |
5,784 |
12,850 |
18,867 |
|||
|
Gold |
oz |
460 |
783 |
1,080 |
2,231 |
|||
|
Rhodium |
oz |
990 |
953 |
1,884 |
2,908 |
|||
|
Ruthenium |
oz |
1,426 |
1,516 |
2,728 |
4,569 |
|||
|
Iridium |
oz |
315 |
327 |
589 |
1,049 |
|||
|
Total PGMs |
oz |
17,141 |
17,975 |
35,314 |
56,996 |
|||
|
Nickel10 |
MT |
146 |
180 |
321 |
596 |
|||
|
|
Copper10 |
MT |
109 |
119 |
228 |
404 |
||
|
Pandora4 |
Platinum |
oz |
11,569 |
15,799 |
29,392 |
41,399 |
||
|
Palladium |
oz |
5,236 |
7,223 |
13,384 |
19,219 |
|||
|
Gold |
oz |
96 |
142 |
229 |
368 |
|||
|
Rhodium |
oz |
1,583 |
2,110 |
4,061 |
5,817 |
|||
|
Ruthenium |
oz |
2,315 |
3,012 |
5,991 |
8,523 |
|||
|
Iridium |
oz |
421 |
695 |
1,036 |
1,893 |
|||
|
Total PGMs |
oz |
21,220 |
28,981 |
54,095 |
77,219 |
|||
|
Nickel10 |
MT |
13 |
18 |
38 |
48 |
|||
|
|
Copper10 |
MT |
7 |
9 |
18 |
26 |
||
|
Ore purchases5 |
Platinum |
oz |
0 |
1,018 |
937 |
3,693 |
||
|
Palladium |
oz |
0 |
476 |
793 |
1,709 |
|||
|
Gold |
oz |
0 |
9 |
74 |
46 |
|||
|
Rhodium |
oz |
0 |
110 |
83 |
526 |
|||
|
Ruthenium |
oz |
0 |
128 |
107 |
798 |
|||
|
Iridium |
oz |
0 |
40 |
25 |
177 |
|||
|
Total PGMs |
oz |
0 |
1,782 |
2,019 |
6,949 |
|||
|
Nickel10 |
MT |
0 |
2 |
16 |
18 |
|||
|
Copper10 |
MT |
0 |
1 |
11 |
9 |
|||
|
Lonmin Platinum |
Platinum |
oz |
184,919 |
218,182 |
531,812 |
662,318 |
||
|
Palladium |
oz |
87,893 |
101,468 |
249,800 |
308,973 |
|||
|
Gold |
oz |
4,787 |
6,301 |
14,136 |
19,041 |
|||
|
|
Rhodium |
oz |
25,259 |
28,683 |
72,042 |
86,907 |
||
|
|
Ruthenium |
oz |
38,977 |
44,893 |
110,742 |
138,082 |
||
|
|
Iridium |
oz |
8,440 |
9,407 |
23,299 |
28,749 |
||
|
Total PGMs |
oz |
350,274 |
408,935 |
1,001,830 |
1,244,071 |
|||
|
|
Nickel10 |
MT |
931 |
1,159 |
2,641 |
3,537 |
||
|
|
Copper10 |
MT |
590 |
685 |
1,637 |
2,151 |
||
|
|
|
|
|
|
3 months to 30 June |
3 months to 30 June |
9 months to 30 June |
9 months to 30 June |
|
|
|
|
|
|
2008 |
2007 |
2008 |
2007 |
|
Metallurgy |
Lonmin refined Metal Production |
Platinum |
oz |
188,350 |
174,128 |
470,999 |
433,561 |
|
|
Palladium |
oz |
91,871 |
77,402 |
220,011 |
193,983 |
|||
|
Gold |
oz |
5,213 |
5,720 |
14,775 |
13,275 |
|||
|
Rhodium |
oz |
25,932 |
21,972 |
68,369 |
52,991 |
|||
|
Ruthenium |
oz |
46,539 |
40,855 |
109,302 |
83,443 |
|||
|
Iridium |
oz |
11,669 |
6,694 |
22,246 |
19,533 |
|||
|
Total PGMs |
oz |
369,574 |
326,772 |
905,702 |
796,786 |
|||
|
Toll refined metal production |
Platinum |
oz |
0 |
60,910 |
0 |
84,782 |
||
|
Palladium |
oz |
0 |
24,795 |
0 |
35,658 |
|||
|
Gold |
oz |
0 |
0 |
0 |
0 |
|||
|
Rhodium |
oz |
0 |
8,038 |
0 |
11,485 |
|||
|
Ruthenium |
oz |
0 |
13,331 |
0 |
18,740 |
|||
|
Iridium |
oz |
0 |
2,637 |
0 |
3,700 |
|||
|
Total PGMs |
oz |
0 |
109,712 |
0 |
154,365 |
|||
|
Total refined PGMs |
Platinum |
oz |
188,350 |
235,037 |
470,999 |
518,344 |
||
|
Palladium |
oz |
91,871 |
102,198 |
220,011 |
229,641 |
|||
|
Gold |
oz |
5,213 |
5,720 |
14,775 |
13,275 |
|||
|
Rhodium |
oz |
25,932 |
30,010 |
68,369 |
64,476 |
|||
|
Ruthenium |
oz |
46,539 |
54,187 |
109,302 |
102,183 |
|||
|
Iridium |
oz |
11,669 |
9,332 |
22,246 |
23,233 |
|||
|
Total PGMs |
oz |
369,574 |
436,484 |
905,702 |
951,152 |
|||
|
Base metals |
Nickel11 |
MT |
960 |
1,502 |
2,282 |
3,106 |
||
|
|
Copper11 |
MT |
567 |
755 |
1,361 |
1,580 |
||
|
Sales |
Refined Metal Sales |
Platinum |
oz |
179,803 |
202,096 |
464,533 |
475,287 |
|
|
Palladium |
oz |
82,775 |
83,436 |
216,765 |
208,320 |
|||
|
Gold |
oz |
5,228 |
7,320 |
14,436 |
14,880 |
|||
|
Rhodium |
oz |
22,545 |
29,089 |
66,082 |
66,259 |
|||
|
Ruthenium |
oz |
44,704 |
46,684 |
110,644 |
103,176 |
|||
|
Iridium |
oz |
9,945 |
11,556 |
21,665 |
25,537 |
|||
|
Total PGMs |
oz |
345,000 |
380,181 |
894,127 |
893,459 |
|||
|
Concentrate and other12 |
Platinum |
oz |
467 |
1,103 |
4,700 |
2,352 |
||
|
Palladium |
oz |
189 |
613 |
2,022 |
1,109 |
|||
|
Gold |
oz |
10 |
(1,912) |
107 |
125 |
|||
|
Rhodium |
oz |
71 |
157 |
829 |
203 |
|||
|
Ruthenium |
oz |
120 |
258 |
1,110 |
348 |
|||
|
Iridium |
oz |
30 |
42 |
270 |
64 |
|||
|
Total PGMs |
oz |
887 |
261 |
9,037 |
4,201 |
|||
|
Lonmin Platinum |
Platinum |
oz |
180,270 |
203,199 |
469,233 |
477,639 |
||
|
Palladium |
oz |
82,964 |
84,049 |
218,787 |
209,429 |
|||
|
Gold |
oz |
5,238 |
5,408 |
14,543 |
15,005 |
|||
|
Rhodium |
oz |
22,616 |
29,246 |
66,911 |
66,462 |
|||
|
Ruthenium |
oz |
44,824 |
46,942 |
111,754 |
103,524 |
|||
|
Iridium |
oz |
9,975 |
11,598 |
21,935 |
25,601 |
|||
|
Total PGMs |
oz |
345,887 |
380,442 |
903,163 |
897,660 |
|||
|
Nickel11 |
MT |
966 |
864 |
2,182 |
3,096 |
|||
|
|
Copper11 |
MT |
546 |
626 |
1,351 |
1,400 |
||
|
|
|
|
|
|
3 months to 30 June |
3 months to 30 June |
9 months to 30 June |
9 months to 30 June |
|
|
|
|
|
|
2008 |
2007 |
2008 |
2007 |
|
Prices |
Average |
Platinum |
$/oz |
1,994 |
1,264 |
1,738 |
1,171 |
|
|
|
Palladium |
$/oz |
437 |
362 |
412 |
340 |
||
|
|
Gold |
$/oz |
883 |
662 |
864 |
624 |
||
|
|
Rhodium |
$/oz |
9,350 |
6,028 |
7,874 |
5,631 |
||
|
|
Ruthenium |
$/oz |
308 |
558 |
391 |
420 |
||
|
|
Iridium |
$/oz |
405 |
413 |
416 |
402 |
||
|
|
Basket price of PGMs13 |
$/oz |
1,820 |
1,309 |
1,658 |
1,190 |
||
|
|
Nickel11 |
$/MT |
22,940 |
34,523 |
25,333 |
27,706 |
||
|
|
Copper11 |
$/MT |
7,909 |
7,285 |
7,330 |
6,883 |
||
|
Exchange Rates |
Average rate for period |
R/$ |
7.76 |
7.07 |
7.34 |
7.20 |
||
|
Closing rate |
|
R/$ |
7.85 |
7.01 |
7.85 |
7.01 |
||
|
Notes: |
||||||||
|
1 |
M&A comprises ore produced by our ultra low profile mechanised equipment. |
|||||||
|
2 |
JV attributable tonnes mined includes Lonmin's share (42.5%) of the total tonnes mined on the Pandora joint venture. |
|||||||
|
3 |
Tonnes milled excludes slag milling. |
|||||||
|
4 |
Lonmin purchases 100% of the ore produced by the Pandora joint venture for onward processing which is included in downstream operating statistics. |
|||||||
|
5 |
Relates to the tonnes milled and derived metal in concentrate from third-party ore purchases. |
|||||||
|
6 |
Head Grade is the grammes per tonne (5PGE + Au) value contained in the tonnes milled and fed into the concentrator from the mines (excludes slag milled). |
|||||||
|
7 |
Recovery rate in the concentrators is the total content produced divided by the total content milled (excluding slag) |
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8 |
The metals in concentrate numbers for the prior year have been restated to adjust for a measurement error, discovered during the fourth quarter in the prior year, which occured at one of our concentrators during the 2007 financial year. |
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9 |
Metals in concentrate includes slag and have been calculated at industry standard downstream processing losses. |
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10 |
Corresponds to contained base metals in concentrate. |
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11 |
Nickel is produced and sold as nickel sulphate crystals or solution and the volumes shown correspond to contained metal. Copper is produced as refined product but typically at LME grade C. |
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12 |
Concentrate and other sales have been adjusted to a saleable ounces basis using standard industry recovery rates. |
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13 |
Basket price of PGMs is based on the revenue generated from the actual PGMs sold in the period. |
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